Indium-tin-oxynitride (ITON) films have been fabricated by rf sputtering from an indium-tin-oxide target in nitrogen plasma. The influence of postdeposition annealing up to 800 degrees C is analyzed by electrical, optical, and surface characterization of the films in comparison to indium-tin-oxide (ITO) films fabricated in argon plasma. High-temperature annealing resulted in ITO(N) films with similar carrier concentrations. However, the resistivity and optical transmittance of the ITON films were higher than those of the ITO films. Photoelectron spectroscopy revealed that nitrogen is incorporated into the ITON structure in an unbound state as well as through the formation of metal-nitrogen and oxynitride bonds that decorate oxygen vacancies. When the core level electron spectra of ITO and ITON films are compared, a correlation between carrier concentration and the incorporated nitrogen is found. Changes in ITON electrical properties are mainly induced by the release of nitrogen at temperatures above 550 degrees C. In this context, ohmic contact behavior was achieved for ITON on p-type GaN after annealing at 600 degrees C, while no ohmic contact could be realized using ITO.